5 Keys to Fundraising Analytics Success
Updated: Apr 29, 2020
Today’s best fundraising organizations leverage data and advanced analytical technologies to succeed. Tools such as machine learning and artificial intelligence now allow development professionals to identify trends, generate micro-segments, efficiently allocate fundraising resources, and discover valuable insights that would have been impossible for even the most experienced fundraisers just a handful of years ago.
However, care must be taken to ensure that these new tools are used properly—that they help achieve a means to an end, rather than become an end to themselves. In that spirit, here are five ways to help ensure fundraising success with today’s cutting-edge analytical tools:
1. Lead with the strategy, not the technology.
It can be tempting for a professional with a new and powerful analytical tool to start analyzing data without first considering the value of the resultant analysis. Every good fundraiser has a set of strategic objectives to accomplish. Data and analytic tools have little-to-no value unto themselves. Rather, they can make the achievement of key objectives more likely, less costly, or both. Imagine a fundraising office building a model to predict mid-level giving. This makes sense if there are plans to staff and manage a leadership giving program, but is almost certainly premature if not. The business strategy needs to determine the analytics strategy to ensure that the analytics investment pays off.
2. Expect and play for small wins.
Every fundraiser knows the allure of the megagift. However, finding the “home run” donor is not where analytics shines. Rather, analytics is most powerful when it improves donation amounts or giving likelihood in small increments which, when scaled, can have significant value. Consider the case of a data-driven targeted fundraising appeal. If the size or likelihood of prospective donors’ contributions can be increased even in very small increments, the ROI can be tremendous when aggregated over thousands of donors. Smart fundraising appeals have the added benefit of not wasting resources reaching out to those who are unlikely to be persuaded to give.
3. Use analytics to support, not replace, your team.
Analytics can be wonderful at uncovering key insights, but people are still needed to interpret the data and interact with potential and current donors. Perhaps one day in the future, an AI-fueled campaign can be fully automated, but—for the foreseeable future—smart and competent professionals are critical to fundraising success. Analytics should be seen as a way to enhance, not replace, human judgment.
4. Train your staff to understand what the data do (and don’t) mean.
Using analytics to supplement human decision-making will fail unless the humans know how to translate data into better decisions. Consider a sophisticated machine learning model that tells us John is 90% likely to donate $1,000 while Meg is 10% likely to donate the same amount. If a fundraiser has the time only to reach out to one of them, should it be John, since he’s a “hot lead,” or Meg, since John may be likely to donate without any outreach? In fact, we don’t know the answer to this question without more information. Ideally, resources should be spent on the person whose likelihood of giving is most influenceable. Often, the data provide us a baseline level of understanding, but not clear direction on what to do next.
5. Start small, ramp up iteratively.
Avoid the temptation to do too much too fast. Business leaders who have expected quick transformations have been burned by the high cost and long timelines associated with deep analytics investments. It is difficult to leap into a cutting-edge analytics program without a foundation of sound data architecture and reporting. Once you have those elements in place, begin with a small, well-defined project and see if it succeeds. If so, do more. If not, try to understand why it failed before taking on another project. Small wins keep investments in analytics manageable and team members excited for more. Achievement and excitement are important drivers of successful analytics scaling.
Investing time and resources in analytical tools can be worthwhile for any nonprofit, but analytics is not a simple organizational add-on. Generating true business value requires leading with strategy and questions borne out of business needs. Start small, honing the models and tools that make your work smarter, faster, and more cost-effective. By combining the latest tools with a strategic and thoughtful approach, an analytics program can make an extraordinary contribution to advancing your organization’s mission.
Erin Moran is a partner at The Solas Group, a leading fundraising analytics and advancement services consulting firm.
Joel Shapiro is Clinical Associate Professor of Analytics at Northwestern University. He is a frequent speaker, author, trainer, and consultant on using analytics to generate business value.